A familiar, depressing report – June 5, 2006

An all-too familiar pattern combined with a new wrinkle led to a depressing snowmobile sales report for the 2005-’06 season.
In the wake of another poor snowfall year, overall snowmobile sales for North America were down 8.7 percent, according to a survey conducted for Powersports Business. Sales numbers were worse in the United States (off 9.2 percent) than in Canada (down 7.5 percent.) This was the ninth straight year the North American market has suffered decreased snow sales.
The usual sales culprit — poor snowfall — led not only to reduced sled sales, but also to poor PG&A sales, according to the Power Products Marketing (PPM) survey.
“Some people have been commenting about the snowmobile market, ‘Well, people aren’t buying new machines, but at least they’re spending in the aftermarket,’ ” said Greg Boeder, PPM senior partner. “And I think that’s true for some components, like maybe upgrade performance components. But when it comes to the basics of jackets, gloves, boots, things like that, I think the low-snow environment is adding to the pain.”
In fact, 56 percent of the dealers surveyed reported decreased PG&A sales. That comes after a 15 percent boost the previous year.
The snow PG&A pains were suffered worst by Arctic Cat and Polaris dealers, with almost 65 percent of each group citing worse PG&A sales. Ski-Doo dealers were slightly better off, with 54 percent reporting worse sales and 25 percent citing higher numbers. Yamaha dealers reported the best PG&A sales, with 38 percent reporting better numbers and 36 percent reporting decreased sales.
PG&A sales were so bad at Central Vermont Motorcycle, Rutland, Vt., that General Manager Jay Eugair said he won’t be ordering any new winter apparel for the next season.
Eugair and the rest of the Northeast dealers suffered through a dismal snow season.
“We had snow in December and December was the busiest month we had,” he said. “We did 90-some odd snowmobiles in December and then it went right downhill from there.”
Fifty-eight percent of the dealers in the Northeast reported poor snow conditions.
“The thing that caught the market hard was the snow in the Northeast was just terrible,” Boeder of PPM said. “And it really caught those guys off guard. They weren’t prepared after having a couple of years of decent snow.”
Eugair said he will join many other Northeast dealers in cutting the number of new sleds he orders for the next season. He said he could cut the number of Arctic Cats and Ski-Doos he orders from 200 to perhaps 75.
“It’s time to cleanse our inventory,” Eugair said. “We’re just carrying too much over.
“We’re (cutting back) with all of our products because interest rates are higher.”
Sled sales were not only tough in the Northeast. Of the dealers surveyed in the Midwest, 74 percent reported either poor or terrible snow conditions.
Since this isn’t a new market twist, dealers are adjusting. Boeder said an industry insider told him most of the dealers in the Midwest have adjusted to the idea of selling snowmobiles in a low-snow environment. “They’re conservative,” Boeder said. “They don’t order as much as they used to. They do everything they can to get rid of their inventory at the end of the year.”
That definitely was the case at Interlakes Sports Center, Madison, S.D. Sales Manager Lance Nordstrom said a bulk of his sales came from his non-current inventory.
“A lot of the stuff that we sold this winter was used customers buying new (non-current) stuff because it was so cheap,” Nordstrom said. “We had 2002, 2003, 2004 carryovers.”
Although the dealership moved a lot of inventory, Nordstrom said “we lost a lot of money.”
He’s not alone. Still, dealers on average won’t be drastically reducing their sled orders for the next snow season, according to the survey. Dealers reported to be ordering about the same number of sleds for the upcoming year, although it can differ dramatically by manufacturer. Yamaha dealers are reportedly going to order more sleds next season while Polaris dealers will order much less, only about 70 percent of this year’s total.
The latter figure could be due to a higher current inventory. Polaris dealers reportedly have 30 percent more inventory this year than the previous season. Yamaha dealers, on the other hand, have 13 percent less inventory, the survey found.
Ski-Doo dealers have 7 percent more inventory while Arctic Cat dealers reportedly have 30 percent more sleds. psb

Greg Boeder is a senior partner for Power Products Marketing, a market research firm based in Minneapolis, Minn. PPM (www.powerprods.com) specializes in the power products and components, powersports and marine industries. Boeder can be contacted at 952-893-6870 or at gboeder@powerprods.com.

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